Last week the GOP’s alleged boy genius and Ayn Rand fan boy, Paul Ryan, “the zombie-eyed granny starver from the state of Wisconsin,” rolled out the GOP’s tax bill with this sales campaign: that a typical family of four will save $1,182 under the GOP tax bill.
“I don’t envy the partisans tasked with messaging against giving middle income families (family of four making $59K) $1,182 back,” AshLee Strong, Ryan’s press secretary wrote on Twitter, adding the hashtag #1182more …
… said the shameless GOPropagandist. Well defenders of truth, justice and the American way have no fear of soulless GOPropagandists, lady.
Dylan Matthews at Vox.com explains how Ryan’s example is a bait-and-switch campaign that will actually raise taxes on middle-class families. Paul Ryan’s poster family for middle-class tax cuts would ultimately get a tax hike:
The problem with selling the bill this way is that the claim is only partially true.
It is true that the average household in 2016, which the Census Bureau estimates makes made $59,039, would get a tax cut worth about $1,100 in the first year. (A more technical quibble with the claim is that many households aren’t families, and the average household size is 2.53, not 4.)
But after the first year, that claim looks much shakier. As NYU tax law professor and former Obama adviser David Kamin explains in a Medium post, the plan would actually result in a sizable tax increase for such a household over time:
The tax cut Ryan talks about initially comes from three main sources. First, the plan introduces a Family Flexibility Credit worth $300 for every adult in the household. That’s $600 off taxes for the $59,000 a year household, right off the bat. Second, the plan would place this family into a 12 percent tax bracket, down from 15 percent now. Third, the plan increases the child tax credit from $1,000 per kid to $1,600 per kid. These cuts are partially offset by the loss of the personal exemption, which under current law will allow families to deduct $4,150 per person from their taxable income in 2018, but this hypothetical family would still come out ahead overall.
But then, as Kamin explains, three funny things happen:
- In 2022, the Family Flexibility Credit expires. This is presumably to make the tax bill cost less for Senate rules purposes, and Republicans will argue that the goal is to make it permanent at that point. Still, in the bill as written, it goes away entirely, raising taxes for this family.
- While personal exemptions rise with inflation, the Child Tax Credit doesn’t, meaning its value erodes over time whereas the personal exemption’s value is set to grow.
- Finally, the plan switches to adjusting tax bracket thresholds using chained CPI, a slower-growing inflation measure. That leads to tax increases for everyone over time, as more and more people get pushed into higher tax brackets.
Put together, these factors lead to a mild tax hike by year 2024, and a $500 hike by year 2027 for this $59,000 a year family of four.
(Kamin also notes that the $1,182 savings figure is slightly off even in 2018. The real savings versus current law is $1,106; the $1,182 number comes by comparing the 2018 tax burden under the plan to the 2017 tax burden under current law, not what the family would pay in 2018 under current law.)
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So, as the bill is written, even the poster family Paul Ryan handpicked to support the bill would lose out by year 10. Keep that in mind when you hear him and his allies claim the bill is an unequivocal tax cut for the middle class.
Congress’s Joint Committee on Taxation agrees that Some middle-class Americans would pay higher taxes under GOP bill, despite Trump’s promise:
President Trump promised to cut taxes for the middle class, but some would end up paying more under the “Tax Cuts and Jobs Act,” according to a report released Friday by Congress’s Joint Committee on Taxation, the official scorekeepers tasked with determining how much any tax legislation would add to the debt and how it would impact the poor, middle class and wealthy.
The Trump administration says it has a “bright line test” that the president won’t support any tax bill that does not give the middle class relief on their taxes. The “Tax Cuts And Jobs Act” that House Republicans released Thursday appears to violate that vow, at least for some middle-class taxpayers.
The JCT found that the GOP bill would add nearly $1.5 trillion to the debt over the next decade and that, on average, families earning between $20,000 and $40,000 a year and between $200,000 to $500,000 would pay more in individual income taxes in 2023 and beyond.
JCT does not explain why these families see an increase, but it is likely that it’s in part because some tax credits aimed at helping the middle class expire in 2023, including the Family Flexibility Credit.
It’s possible that other families will also see their tax bills jump under the plan. JCT only reports what happens to the average taxpayer in each income bracket.
The conservative Tax Policy Center’s analysis echoed what the nonpartisan Joint Committee on Taxation — the official congressional body that analyzes tax bills — found: that some in the middle class would see a tax increase under the bill. This analysis has since been retracted after discovering an error in its model. Influential think tank retracts analysis of GOP tax bill:
The center has pulled all materials related to its initial report and said it will issue a corrected version as soon as it is able, likely Tuesday.
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The uncorrected version of the report released Monday showed that the bulk of the House GOP bill’s benefits would go to the wealthy and that many working class households earning under $48,000 would see their tax bills rise in upcoming years. That conclusion contradicted Republican claims that the bill was crafted to help the middle class.
Someone familiar with the error who was not authorized to speak publicly said the revised report would likely come to a similar conclusion overall, but that exact numbers of how many Americans are helped and hurt would be different.
A New York Times analysis finds that nearly half of all middle-class families would pay more in taxes in 2026 than they would under current rules if the proposed House tax bill became law, and about one-third would pay more in 2018. Republican Plan Would Raise Taxes on Millions:
President Trump and congressional Republicans have pitched the plan unveiled last week as a tax cut for most Americans. But millions of middle-class families — particularly those with children — would see an immediate tax increase, averaging about $2,000. Among the hardest-hit under the plan would be some of the most vulnerable taxpayers: those with huge out-of-pocket medical expenses.
By 2026, 45 percent of middle-class families would pay more than what they would under the existing tax system.
The preliminary Times analysis found that, in 2018, the plan would cut taxes for about 68 percent of families in the middle class, broadly defined as those earning between two-thirds and twice the median household income, or between about $50,000 and $160,000 per year for a family of three. For most of those families, the cut would be about $1,300 in 2018. In order to focus on families, the analysis excluded individual filers and households headed by people 65 or older and is adjusted for the size of each household.
Analyses published since the plan was introduced last week have consistently found that some middle-class families would see their taxes go up immediately, compared with existing law. One such analysis, from the Institute on Taxation and Economic Policy, found that 8 percent of middle-income earners would pay more in 2018 — and 21 percent in 2027 — with upper-middle-class taxpayers more likely to see their taxes rise.
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The millions losing out under the bill would largely be families with more complicated finances, who now generally itemize their deductions. The bill would eliminate many common and valuable tax deductions that, in some cases, would eliminate thousands of dollars in tax benefits. This would be particularly acute for taxpayers who deducted state and local income and property tax payments, interest on student loans, or the cost of health insurance for self-employed workers.
The plan could be particularly costly for Americans facing large medical bills. Nearly nine million taxpayers collectively deducted about $84 billion in medical expenses from their taxes in 2015. The House bill would eliminate that deduction.
Many of the provisions that would benefit middle-class taxpayers in the House bill are set to expire or lose value over time, resulting in a tax increase over time.
Caveat emptor (buyer beware). This is consumer fraud: a bait-and-switch sales campaign for the GOP tax bill.
Call your members of Congress today and demand that they reject this fraudulent GOP tax bill.